Wednesday, May 02, 2007

The Beer Lobby Leaps Into Action

I love Oregon beer with a passion. It's maybe 15% of the reason I wanted to move back here from Virginia, which when you think about it is a lot of effort for, y'know, beer. The craft brewing tradition and commitment to quality in this state are economic and cultural jewels, and I don't wish to see them harmed. But there are certain truths at hand, and in an attempt to perhaps avoid discussion of those truths at a time when beer-tax increase bills like HB 3421 might find their way onto the committee docket, supporters of the beer lobby have hit the state print media to make their case.

Since I had a disclaimer for OR-beer in general, let me give one for Rock Bottom Brewery in Portland. I know it's a chain, but the brewmasters get pretty wide latitude for their own shop, and for an Applebee's kind of food service/hospitality style it's a good restaurant. Certainly the beer is always fresh and very well and consistently made, and they do great charity things with their annual Fire Chief Ale. But I have to take a bit of issue with Meister Van Havig over his editorial in Monday's O, Monday apparently being B-Day for the brewer's lobby to hit the print beaches:

...our industry is now threatened by proposals in the Oregon Legislature to raise taxes on beer, some of which would make our beer taxes the highest in the country. Few people realize that taxes already are the single most expensive ingredient in beer, costing more than labor, barley or hops. And higher beer taxes would be especially hard on Oregon's craft brewers, because we don't have the economies of scale that the large national brewers do.

Backers of these bills want to increase beer taxes to fund things that we truly need in this state, such as alcohol and drug treatment programs or more state troopers. But these are issues that affect all Oregonians and are far too important to rely on an unfair tax on a single industry to support. Policy prescriptions that are vital to all of our citizens need to be funded by all our citizens -- not just brewers and beer drinkers.

In the spirit of Van's education of the casual beer-drinking public, what few people also may not realize is that Oregon's beer taxes are currently among the lowest in the nation, on par with other "beer states" (Colorado, Wisconsin, Missouri). Furthermore, Oregon's tax revenue from beer is utterly dwarfed by the public costs of alcohol use in the state, suggesting a revenue deficit that's pretty easily explained by a very low tax. They may be issues that affect all Oregonians, but alcohol-related costs are called 'related' for a reason. So I'm unpersuaded by his unfairness arguments.

Remember I noted that the 30th seemed to be PR day for the beer lobby? That's because four days earlier in the Salem paper, a hop grower softened the people up with the same song: tax bad, craft beer (and now associated farming) good. And then on the 30th, the same day The O ran Havig's editorial, this innocuous looking "business item" showed up on in the S-J:

Beer is big business in Oregon.

Brewers, importers, distributors, suppliers and retailers -- all ultimately serving the drinker -- create a beer economy of $2.2 billion annually, according the National Beer Wholesalers Association and the Beer Institute.

The beer industry directly employs 13,326 people in Oregon, paying them $324 million in wages. Large and small brewers and beer importers employ 742 people in Oregon, and Oregon's 54 beer distributors employ approximately 1,352 people.

Subtle, eh? And I don't know if this was designed to keep people talking booze all day long around the water cooler, but the S-J also chose Monday to run a piece about the rise of craft distilleries (which is definitely cool).

I was all ready to write this interesting confluence of media pressure story yesterday, when Tuesday's O hit the porch (not really, who buys a paper anymore?) and Steve Duin's column fell open (i.e., it came up in a Google search). He doesn't mention the coordinated PR effort, but does call Havig on the carpet for being over Oregon-centric on behalf of a Colorado chain. But as I say, it's really a Portland restaurant and I don't think that's a fair criticism. As for the rest of them though, I'm on Duin's side. For one thing, some of the main concerns--taxation shock and small-brewer pain--have been taken care of, by raising the limit on volume produced so all craft brewers in the state are currently exempt, and phasing in the tax increase with about a 25% cut in 2008 to start. I think you should also provide a transition phase-in for any craft that wants to go big time. You'd have to exceed the limit for a couple years in a row to trigger the tax, and then you'd be phased in over five years again. That should give any enterprising brewer who wishes to expand his or her operation plenty of time to build in the cost increase gradually.

I really don't want to see the industry hurt, so I favor a lot of the exemptions above. But the truth hits home in some of the figures put together by the Center for Science in the Public Interest {pdf}. Among other items showing how low Oregon's tax is in relation to other states, it also indicates a potential link between beer tax rates and juvenile bingeing, but particularly bingeing among 18-20 year olds. Low tax states had a markedly higher rate. I wouldn't go calling it causality right offhand, but it's compelling to think about. Easier to grasp is the ratio of per-capita beer tax revenue ($3.69) with its per capita alcohol-related costs ($144). One hundred and forty dollars--that's definitely a bit of a gap. We don't have to go crazy; it seems some of the proposed revenue figures suggest "plenty of money" will be raised and maybe there shouldn't be plenty, but rather just enough. But it's time to bring our tax rate into parity without hurting the state's shining star industry (sorry Nike). It's possible to bring Oregon's tax rate up to date and into line, without putting the squeeze on our hometown hopheads.